The Evolution of Wealth
Millennials are a generation that have grown up highly connected, with easy access to technology. As they have grown older, this generation born between 1982 to 1996, have seen this distinctive feature affect every area of their lives, from the way they purchase products, their education and even who they date. Now, during the Covid-19 pandemic, we have seen a new manner in which millennials are doing things differently from their predecessors, through the way that they invest.
If we take a country like the United States as an example, as of 2019 there were 72.1 million people who counted as millennials. Currently, this generation is only in possession of USD 9.1 trillion in assets. However, according to a study done by Deloitte, this amount is set to increase by USD24 trillion between 2015 and 2030 solely due to inheritance. Alongside this, the amount will also be increased as they begin to work or gain more seniority in their roles at work.
Along with this great transfer of wealth which will occur, we will also see an uptake in investing. Currently in the US, only 30 million Millennials are active investors.For years we have seen online trading platforms like Fidelity, Charles Schwab and Interactive Brokers serve as brokers for people who want to invest. However, with the Covid 19 pandemic came the new rising star that is Robinhood. Robinhood, which in August 2020 was valued to be worth USD11.2 billion, is a platform which greatly caught the attention, and wallets, of many young and first time investors. This is due to the fact that it has an easy user interface, no minimum account balances and zero trading commissions.
Whether or not the hype of online trading platforms like Robinhood will stand the test of time is yet to be seen. However it is facts like this which show that there is much change that needs to be done in the area of traditional wealth management, and financial services in general. According to research done by Accenture, Millennials want to see an increase in the incorporation of technology into the services which they receive. A few examples of this are the fact that 67% want computer-generated recommendations (robo) as a basic component, 63% want a mobile platform that connects directly to advisors and 65% want gamification that will help them learn more about investing and keep them more engaged with their portfolio.
Another trend which differentiates millennials from their predecessors in terms of their investment interests is their interest in environmental, social and corporate governance (ESG). According to research done by Morgan Stanley, in 2019, 95% of millennials also have an interest in sustainable investing. With 90% of millennial investors stating that they will adjust their investments based on their values, this means we will not only see a rise in investing based on sustainability, but also on other issues which millennials are concerned with today, such as fair labour and human rights practices and diversity concerns. In this way, some millennials see their wealth as a force for change in today’s society.
"90% of millenial investors state that they will adjust their investments based on their values"
With the next generation on the verge of coming upon a large amount of wealth over the next two decades, we will see a large amount of change between how this wealth was handled between the people of Generation X and millennials. How exactly traditional institutions will be able to adapt to the demands of these new investors is something that will be prioritised over the next few years, with a strong focus on the use of technology and the use of ESG planning.
